HomeCo Daily Needs REIT (ASX:HDN) Half Year 2026 Earnings Call Highlights: Strong Growth Amid …

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Wed, February 11, 2026 at 2:00 PM GMT+9 4 min read

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**FFO per Unit:** Increased by 2.5% on the prior corresponding period.

**Distributions per Unit:** $0.043, up 1.2% on the prior corresponding period.

**NTA per Unit:** Increased to $1.55 from $1.47 at June.

**Gearing:** 35.2%, reduced to 34.6% post balance date settlement.

**Comparable NOI Growth:** 4% in the period.

**Leasing Spreads:** 6.2% across 97 leasing deals.

**Occupancy Rate:** Sustained above 99%.

**MAT Growth:** Total MAT growth of 2.4%; non-supermarket tenants reported 3.7% growth.

**Property NOI:** Increased 4.6% to $148.7 million.

**Weighted Average Cap Rate:** 5.51%.

**Weighted Average Cost of Debt:** 4.8%.

**Development Pipeline:** $650 million with a target return on invested capital of at least 7%.

**FFO Guidance for FY26:** $0.09 per unit.

**Distribution Guidance for FY26:** $0.086 per unit.

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Release Date: February 10, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

HomeCo Daily Needs REIT (ASX:HDN) reported consistent top-line revenue growth, driving FFO per unit up 2.5% on the prior corresponding period.

The company achieved a distribution increase of 1.2% per unit, with a payout ratio moderating as part of a plan to align distribution with AFFO over time.

HDN recorded positive net valuation gains for the fourth consecutive period, driven by strong NOI growth and tenant-led developments.

The portfolio maintained high occupancy above 99% and achieved leasing spreads of 6.2%, indicating strong operational performance.

HDN's investment strategy focuses on creating daily needs community hubs, aligning with growth strategies of leading Australian retailers and supporting sustainable growth.

Negative Points

Net interest expense increased due to the higher interest rate environment, impacting financial performance.

The economic environment and rising interest rates pose challenges, requiring careful management of capital deployment and development pipeline timing.

The company faces competition in the sector, with increased investor appetite and capital raising activities by other funds.

HDN's payout ratio remains high at 106% of AFFO, indicating a need to adjust distributions to align with cash flow.

The development pipeline's deployment timing is under review due to prevailing risk and return hurdles, potentially impacting growth opportunities.

Q & A Highlights

Q: Can you provide an update on the group’s weighted average margin across the debt book and expectations for future refinancing? A: Paul Doherty, Fund Portfolio Manager: The current weighted average margin is around 1.3%, and we expect further improvement as debt rolls off. Phil Dooley, CFO: The recent refinancing reflects the portfolio’s credit quality, with a margin of $115, indicating potential for improved margins moving forward.

Story Continues  

Q: How have retail trading and consumer behavior been recently, especially in light of economic changes? A: Phil Dooley, CFO: MAT growth across the portfolio is 2.4%, with non-supermarket retailers showing 3.7% growth. Retail sales have been strong, particularly in Homes and Electrical categories. Post-interest rate rise, growth rates have moderated but remain healthy.

Q: What is the outlook for investments in unlisted funds, and how competitive is the sector? A: Sid Sharma, Director: The first vintage of the last mile retail strategy is fully deployed, and the second vintage has been seeded. The sector remains competitive, but HomeCo is confident in finding high-quality, mispriced retail assets.

Q: Why didn’t the 42.5 basis point margin reduction lead to an upgrade in guidance? A: Phil Dooley, CFO: The recent interest rate increase covered the exposure on the unhedged portion of debt, keeping us in the middle of guidance.

Q: Can you provide insights into leasing spreads and potential rent upside? A: Paul Doherty, Fund Portfolio Manager: Of the 97 deals in six months, new leases showed low-double-digit leasing spreads, while renewals had a spread just under 5%. Incentive levels remain low, indicating strong leasing performance.

Q: How is the development pipeline being managed in light of current economic conditions? A: Sid Sharma, Director: The focus is on managing within balance sheet means, with a potential slowdown in deployment due to interest rate outlook. The aim is to maintain earnings growth while assessing development timing.

Q: What is the current payout ratio as a percentage of AFFO, and how is it being managed? A: Sid Sharma, Director: The payout ratio is about 106% of AFFO. The goal is to right-size the distribution to AFFO as quickly as possible, with updates expected in the future.

Q: How does the company view capital allocation, particularly regarding buybacks versus development opportunities? A: Sid Sharma, Director: Buybacks are always under consideration, and the company evaluates capital allocation based on risk-adjusted returns. The focus remains on disciplined investment and maintaining a strong portfolio.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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